Computer Sciences Corporation has signed an agreement with a subsidiary of DST Systems…
…to exchange CSC’s Health Plans Solutions (HPS) business for approximately 7.13 million CSC common shares held by the subsidiary. The shares represent approximately 3.8% of CSC’s outstanding shares. This exchange, which is subject to customary regulatory approvals, is expected to close this month.
The HPS business, which will hold $224.6 million in cash so that the value of the business and the CSC shares exchanged will be equal, is valued at $324.6 million, or $45.53 for each CSC share. CSC expects to recognize a gain on the exchange for financial reporting purposes during the first quarter of fiscal 2006. Commencing with CSC’s fourth quarter of fiscal 2005, the Health Plans Solutions business will be reported as a discontinued operation and prior periods restated.
HPS develops enterprise software for the U.S. commercial healthcare industry. The business has approximately 700 employees and annual revenue of approximately $105 million. HPS is not a core CSC business. Its platform and size inhibit synergies with CSC’s other offerings in the healthcare market and do not complement the company’s overall growth strategy. After the transaction, CSC will continue to provide outsourcing, consulting and systems integration services to both government and commercial customers in the global healthcare market.
The exchange will reduce the company’s share base and be accretive to earnings per share for fiscal 2006. The transaction complements the company’s objective of enhancing shareholder value while continuing to maintain a strong balance sheet. In furtherance of this objective, CSC will continue to explore strategic options, including acquisitions, additional share repurchases, debt reduction and the pursuit of large transactions with clients.
murdok | Breaking eBusiness News
Your source for investigative ebusiness reporting and breaking news.
